BiggerPockets

Just wondering who all on here owns their own property management company. It seems like a fairly decent job to do on the side.

I've been showing houses around the Houston area, and have spoke with a broker who manages about 35 properties in my area. Seems like its a very leveraged job as far as time goes.

Can anyone chime in with their experience, or how well they are doing with this? I've been thinking about venturing into this side of the business, but would like to hear some feedback first.

Please note: I am talking about managing SFRs only. Not for apartment complexes. The idea of residuals every month seem more appealing to me.

Could you also break down a sample pay structure as well?

Thanks in advance

Danny

I use it as a complement to brokerage. Brokers would otherwise have a one-off client, buying or selling a property, and then ending the relationship.

With an attached management company, they can keep their clients, and almost ensure future brokerage with the property owner, since there's a sense of loyalty, even without a contract.

Plus, you usually need a broker's license to be a manager. One of the things you need to look into is how to minimize costs. Management isn't always time-intensive, but it can be off and on. You need to minimize the amount of time you do it, so that it can truly be an "on the side" sort of thing, and you only have to make the occasional tenant call.

Side note, sometimes you get interesting calls from your tenants, with such conversations as "A car ran into the house today" or "Yeah, we do have 12 chickens in the garage."

Moral of the story: never be surprised. Never. There is nothing that can happen that won't happen to a property you manage. You will have some of the most interesting conversations with tenants and with the owners when you pass along the message.

More money in managing Multifamily and Commercial.

I personally do not have the mindset for it.I focus on the transaction side of buying and selling and doing my own investment.

If you do want to practice property management you will need to ask your head broker if their E and O policy covers property management.Many times it does not.

Some insurers won't write the policy or if they do it will be 2 to 3 times more per year in cost.

Property management is the most sue happy of all categories.

Development comes in a close second because of multiple parties money involved and lenders,phases of construction etc.

Commercial then short sales and foreclosures.Plain vanilla residential purchases are considered the lowest risk for insurers that are regular sales.

If your broker wants to do it or you are the broker then have a separate brokerage with a corp.

This way the policy and company is separate and if you get a big lawsuit and lose you can shut down that part without affecting your main brokerage and other E and O policy.

I might eventually have a commercial property management company but it will be completely separate and I will have someone else run it.I would just have it to appease my clients.I am still thinking it over.

I would rather run a 100 unit apartment building then 100 houses with multiple clients and personalities,etc.

One set of regs to keep up with,same rents,one set of papers,one client etc.

----------------------------------------

So Cassandra off of 100 rentals you only made 2,000 to 5,000 a month??

Man I know you aren't running it yourself but that is such a low return for a huge headache.

pretty simple business. I charge 10% of collected rents for SFR management, that's typical in Albuquerque.
two critical areas of choice determine whether you make any money. when you choose the property you manage, and when you choose your tenant, get those right and it's easy money, get them wrong and its a nightmare
good luck, victor

We started in 2004 and have about 1,000 units, no buildings bigger than 30 units so alot of sfh, duplex, quads. The money is in volume . In theory you can manage a sfh that's rented and a good tenant who takes care of the place and it's easy money. It's when you have vacancy, maintenance nightmares, and bad nonpaying or destructive tenants that the job becomes less profitable per hour invested. It's sounds easy, but the best first impression tenants can turn out to be nightmares, and when AC units go bad in the summer get ready for a mess. Also, the most underrated aspect, your liability for when anything goes wrong at the house. Broken this, got hurt, etc etc, the manager will be the first one sued.

I cant tell you how many people have said to me " oh you collect rent and fix toilets, must be easy money"... There is a reason propery owners are willing to pay 7% for just management, plus leasing fees, and for maintenance....because it's to much of a headache to deal with.

Most tenants are great and easy, but like many things it's that one bad apple that can push you over the edge.

Brandon,

My friend is getting rid of a 4/2 in 38125 zip. He is willing to finance. 5112 Autumn Evening Ln. PM me if interested. Maybe you can find an investor for it and do a better job managing it.

PG

Originally posted by Gamal R.

My new concern is that this business is not really scalable, theres only so much someone can handle and the financial reward is not huge.

Most businesses are scalable if you know how to do it. And I'm quite certain a PM business is easily scalable if you know how to do it.

What specific types of scaling issues are you having? Perhaps we can help...

Do you have any employees at this point?

Gregory, others,

If you do decide to go into pm please don't put a property "on hold" (their words) and let the grass grow to 5 feet and let the owner get a fine from city code enforcement like the PM I just fired in Memphis did. A Memphis pm who has posted here. Especially if it is an out of state investor who is really counting on you to watch his/her property. We can't afford to fly across the country just to see if the grass is getting cut on a vacant property or not.

Private message me if you want to see photos of 5 foot grass, huge piles of trash in the yard...etc of a property I had under contract with this guy for 2 months. I would have GLADLY sent him $$ (in fact I did) to take care of the mess.

This is not fiction.

PG

Post by J Scott.
Most businesses are scalable if you know how to do it. And I'm quite certain a PM business is easily scalable if you know how to do it.

What specific types of scaling issues are you having? Perhaps we can help...

Do you have any employees at this point?

I do not have any empolyees yet but I will starting early next year. I guess I can always leverage my business through employees but it just seems that the money I will make is not big money. I just think my efforts as a Broker or Business owner would be more rewarding if i focused on selling these investment properties instead of just managing them.